In this
case, the Federal Election Commission accuses two individuals
of violating the Federal Election Campaign Act's
prohibition on making contributions in the name of another.
Defendant Jeremy Johnson is accused of making approximately
twenty contributions to the 2010 senatorial campaign of Mike
Lee in the names of other people. Defendant John Swallow is
not accused of making any contributions himself but of
assisting Defendant Johnson in doing so. The motion now
before the Court is Defendant Swallow's motion to dismiss
the case against him because what he is accused of is not
against the law. His position is straightforward: the Federal
Election Campaign Act applies to only three types of people
and he is not one of them. He claims that the case against
him only charges him with secondary liability and that
Congress clearly did not include a ban against secondary
actors in the Act. The case against Defendant Swallow rests
entirely on 11 C.F.R. §110.4(b)(1)(iii), which he argues
is a regulation beyond the Commission's authority to
adopt. In Mr. Swallow's view, the provision is
unauthorized law-making in violation of the United States
Constitution, which vests legislative power solely in the
United States Congress.

The
Commission admits that its case against Mr. Swallow is based
on the CFR, which was adopted in 1989. It claims that the CFR
is a proper exercise of the Commission's authority to
enforce FECA. It claims that a person such as Mr. Swallow,
who assists another person in violating the Act, is just as
liable as the person who made the improper contribution. The
Commission goes so far as to say that a person who does not
part with his own money and whose only role is to assist
another to make a contribution in someone else's name
qualifies as a person who actually “makes” the
contribution. On this basis, the Commission both opposes Mr.
Swallow's motion and asks the Court to grant its own
motion for partial judgment on the pleadings.

Oral
argument was heard on the motions on March 27, 2018. Ms. Sana
Chaudhry and Mr. Harry Summers appeared on behalf of the
Commission, with Ms. Chaudhry making the argument. Mr. Allen
Dickerson, Mr. Tyler Martinez, and Mr. Scott Williams
appeared on behalf of Mr. Swallow, with Mr. Dickerson making
the argument.

DISCUSSION

Congress
passed the Federal Election Campaign Act in 1971
(“FECA”). 52 U.S.C. §§30101-46. The Act
placed limits on the amount of money a person is allowed to
contribute to a candidate for federal office. In 2010, the
amount was $2, 400.00 per election cycle. Section 30122
states as follows:

No person shall make a contribution in the name of another
person or knowingly permit his name to be used to effect such
a contribution, and no person shall knowingly accept a
contribution made by one person in the name of another
person.

52 U.S.C. §30122.

In
1974, Congress created the Federal Election Commission
(“FEC” or “the Commission”) as an
independent agency to civilly enforce FECA's monetary
limits and disclosure requirements. In 1976, the Commission
promulgated a regulation regarding FECA's ban on
contributions made in the name of another, which made
specific reference to the two most common forms of such
contributions: false name and conduit contributors. 11 C.F.R.
§110.4(b). A false name contribution occurs when a
person contributes to a candidate but falsely attributes
another person as the source of the contribution. A conduit
contribution reaches the same result when a person provides
funds to another person (the conduit) who contributes the
funds to the candidate.

For 13
years after 11 C.F.R. §110.4(b) was established, it was
the only regulation adopted by the Commission that dealt with
section 30122's ban against making contributions in the
name of another. There is no question this 1974 regulation is
a proper reflection of the law passed by Congress. In 1989,
however, the Commission decided to add a new regulation which
for the first time declared that “no person shall
knowingly help or assist any person in making a
contribution in the name of another.” 11 C.F.R.
§110.4(b)(1)(iii) (emphasis added). The Commission's
basis for adopting the new “helping and
assisting” provision was an unpublished case from the
United States District Court for the Middle District of
Florida, Federal Election Commission v. Rodriguez,
No. 86-687 Civ-T-10 (M.D. Fla. Oct. 28, 1988), in which the
court held that a defendant had violated FECA's section
30122 by “knowingly assisting in the making of
contributions in the name of another.” (Dkt. 103, Ex. A
at 2.) Apparently impressed with what the district judge did
to a pro se defendant in Rodriguez, the Commission
felt justified to adopt the new provision. In its
“interpretive guidance” for the new regulation,
the Commission explained that it applies to: “those who
initiate or instigate or have some significant participation
in a plan or scheme to make a contribution in the name of
another, including those who solicit or act as go-betweens to
third parties whose donations are reimbursed.” 11
C.F.R. 110.4(b)(1)(iii); 54 Fed. Reg. at 34, 104-05 (1989).

Thus,
for the first time, secondary actors, what the criminal law
calls “aiders and abettors, ” and what the new
regulation calls “helpers and assisters, ” were
brought into the realm of persons who face civil liability
under FECA.

The
question framed by the parties' cross motions, as
outlined above, asks simply whether the Federal Election
Commission had the right to promulgate section
110.4(b)(1)(iii). The answer is no. The Commission, as an
independent agency created by Congress for the sole purpose
of enforcing FECA had no authority to write a regulation that
went beyond the Act itself. The Court finds FECA's
language to be unambiguous. It is limited to a prohibition on
three types of persons and only those three: 1) a person who
makes a contribution in the name of another; 2) a person who
knowingly allows his name to be used by the contributor; and
3) a candidate who knowingly accepts such a contribution.
Nowhere in the language of section 30122 is there any room
for adding a fourth category consisting of secondary actors.
While it may, or may not, be a good idea to expand the reach
of FECA in such a way, such expansion may happen only through
an Act of Congress, pursuant to Article I of the United
States Constitution. Such power does not exist in an
independent agency comprised of six unelected commissioners.

The
Commission makes several arguments in an effort to persuade
the Court that it had the authority to pass 11 C.F.R.
§110.4(b)(1)(iii). First, it cites the
Rodriguez case as judicial precedent. This district
court case from the middle district of Florida is neither
binding on this Court nor persuasive. This 1988 case involved
the FEC's claim that Mr. Rodriguez had violated FECA by
knowingly assisting Mr. Alan Wolfson in making contributions
to the Carter/Mondale campaign through conduits. Mr.
Rodriguez did not respond to the complaint and a default
judgment was entered against him. He was ordered him to pay a
$5, 000 civil penalty. When he failed to pay the penalty he
was held in contempt of court. There was no written opinion
addressing the merits of the case, nor was there any effort
by the defendant to challenge the Commission's, or the
court's, unprecedented expansion of FECA into secondary
liability.

Next,
the Commission argues that the language of section 30122 that
states: “[N]o person shall make a contribution in the
name of another person” should be construed to include
as prohibited “persons” not only the person who
is the source of the contribution but also those who help or
assist the actual contributor. The Commission claims the word
“make” means “to cause (something) to
happen” and therefore ...

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